Internal and External Recruitment

Cite this article as: businesstopia, "Internal and External Recruitment," in Businesstopia, February 4, 2018,

Recruitment and its types

Recruitment is the process of identifying human resource needs of the organization and taking necessary steps to overcome the probable problems that may arise due to human resource deficiency. There are generally two basic methods of recruitment; internal recruitment and external recruitment.

Internal recruitment

Internal recruitment is the process of filling the vacant positions in a company by the employees within the business premises. In simple words, it can be understood as the method where existing workforce of the company are referred or taken into consideration for any available suitable post. Under this approach there are few methods, following which existing employees can fulfill human resource need of the company.

Employee referral

In companies, there are employees, and then there are supervisors who evaluate their performances. The supervisors keep proper record of each and every employees. In time, when the company is in need of human resources, these records are reviewed and the most hardworking or potential employees are referred for the vacant posts.


Promotion in an internal recruitment

Promotion is the act of advancement of employee’s post in the company. In some organization, it is mandatory, meaning that employees are promoted in certain interval of time period, while in others, employees are promoted as per their performance.


In large scale organizations having several branches, human resource need of one branch can be fulfilled by the human resource of another branch. Under this method, human resource need at any branch is identified at first. Information about vacancy is then distributed in all the branches, following which, interested and suitable candidates are transferred.

Advantages of internal recruitment

Internal recruitment is easy and fast method of recruiting employees, apart from which, it has several other benefits.

Encourages hardwork and develops employees

When employees are recruited from within the organization, it sets a mentality in employees’ minds that sincere employees are promoted. Promotion means increased payment and fame. So they become encouraged to put more efforts and make quality outputs. This results in development of employee.

Accurate selection

When employees are recruited from inside, there is almost zero chances of selecting a wrong person because company does not only have its employees’ record but also knows them personally which is not possible in external recruitment.

Economic in nature

External recruitment involves various processes like job announcement, interview, etc which is both time and money consuming. In contrast, internal recruitment saves time as well money.

Strengthens employer-employee relationship

Internal recruitment strengthens employee employer relationship

When employees are promoted or transferred to better branch, employees feel valued by the company and in return employees also become loyal and faithful to its company. This strengthens employer-employee relationship and makes a company stronger.


When new employees are hired, they require training and orientation. But when employees are recruited from inside the company, they takes less time to adapt to new work because they are already familiar to environment, employees and culture of the company.

Disadvantages of internal recruitment

Although internal recruitment is cost and time effective, it also has some drawbacks. These drawbacks are described below.

Promotes unemployment

There are people outside the office as well who are capable or has potential to complete the concerned task. So when companies keep recruiting employees from inside, external talents are deprived of working platform.

Promotes favoritism

Favoritism is an unfair practice where people or groups are treated in bias. Simply, favoritism is the act of showing personal preference towards a person or a group.

Limited choice

Internal recruitment limits the choice of company. Candidates inside the company may not be as skilled as the post demands them to be.

Cite this article as: businesstopia, "Internal and External Recruitment," in Businesstopia, February 4, 2018,

External recruitment

External recruitment is the process of filling vacant posts of the company by the employees excluding the existing ones. New people with required skills and qualification are enrolled in the organization and thus new ideas are initiated in the company. External sources that can fill up vacancies in the organization are described below.


advertising in recruitment

Advertisement is the most widely used method for external recruitment. Companies announce vacancies through electronic and print media such as newspaper, magazines, television, radio and internet.


Walk-ins are those who enter the organization in search of job. This method is applicable for unskilled and semi-skilled posts.

Private employment agencies

Private employment agencies work as a middlemen between prospective employees and companies. They maintain databank of job vacancies as well as job seekers and make a perfect match. Such agencies charge commission for rendering their service.

Educational institutes

Nowadays, most of the companies have started the trend of conducting direct recruitment from colleges and universities. Companies visit educational institutes annually and recruit bright students, especially at managerial level. This saves time and money and encourages students to study hard.

Labor contractors

Labor contractors and private employment agencies are similar in nature. They keep regular contact with laborers and industries, and provide the industries with laborers whenever required. They also charge commission for their service rendered.

Advantages of External recruitment

Qualitative human resources

External recruitment creates a pool of eligible candidates and best-qualified ones can be chosen easily as the management team has greater choice of selection. This ensures the quality of human resources in the organization.

Rejuvenates organization

When employees are recruited externally, there is inflow of new ideas, skills and enthusiasm in organization. This rejuvenates organization and its system.

Better adaptation to the changing environment

Technologies are changing rapidly in this generation and enrollment of new ideas, knowledge and skills help in adaptation to the changes easily.

Disadvantages of external recruitment

Demoralize employee

Hardworking employees expect upgrade of their position. But when new employees from outside are hired, the existing employees feel demoralized. This may lead the existing employees to resign from the job as well.

High cost

high cost in external recruitment

External recruitment is a long process and it includes various steps like job announcement, orientation, training, etc. This is time consuming as well as money consuming.

Adaptability problems

New employees take time to get used to the culture and environment of the organization. They also take time to get comfortable with their colleagues which hamper their performance.

Chances of wrong selection

There are chances that the management team selects a wrong employee. If wrong employees are selected then effectiveness of organization is decreased.

Promotes nepotism

Nepotism is the practice where people with some kind of authority favors their relatives and friends by offering jobs. While recruiting employees from outside, chances of nepotism is high.

Differences between internal and external recruitment

Internal recruitment External recruitment
1. Vacant posts are filled by the existing employees through promotion, transfer and employee referral. 1. New employees are hired from outside the company through employment agencies, educational institutes, advertisement, etc.
2. Internal recruitment is easy, fast and economic. 2. External recruitment is a long and expensive process and requires proper evaluation.
3. Internal recruitment assists as a motivation boosting factor. 3. External recruitment demoralize the existing employees.
4.Employees recruited internally do not take much time to adapt to their new working environment. 4. Employees recruited externally takes long time to adapt to their working environment.
5. New ideas and skills are not initiated in the company. 5. New ideas and enthusiasm are enrolled in the company, rejuvenating company and its system.
6. Internal recruitment does not help in eliminating unemployment. 6. External recruitment helps in reducing unemployment problems.
7. Chances of selecting a wrong employee is almost nil. 7. There are chances that a wrong employee is selected.
8. Management team has limited choice for selection. 8. Management team has a pool of choices and thus can select the most appropriate candidate.